Obama budget defies GOP demands on taxes, spending

BUDGET

Richard S. Dunham

Published 4:00 am, Tuesday, February 14, 2012

Washington --

Declaring that he was seeking "an economy that is built to last," President Obama unveiled an election-year budget blueprint Monday that would spend more on roads, college aid, renewable energy and incentives for American manufacturing while hiking taxes on millionaires and the oil and gas industry.

Obama's $3.8 trillion budget - the biggest in American history - mirrored the Democratic incumbent's populist economic message of recent months. To pay for what he calls "investments" in America's future, the president would force the wealthiest 2 percent of Americans and certain businesses to ante up $1.5 trillion in additional taxes over the next decade.

Defying Republican demands to reduce federal spending, Obama instead embraced the liberal economic theory that a new round of government spending would stimulate the nascent economic recovery.

"We can't just cut our way into growth," Obama said. "We can cut back on the things that we don't need, but we also have to make sure that everyone is paying their fair share for the things that we do need."

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Republicans responded with a combination of disgust and dismay to Obama's spending proposal for fiscal year 2013, which starts Oct 1. Senate Republican Leader Mitch McConnell, R-Ky., dismissed the president's proposal as "a campaign document." The top Republican on the Senate Budget Committee, Jeff Sessions of Alabama, dubbed the budget "debt on arrival," a wry variation on "dead on arrival."

"The president has needlessly killed many trees and wasted many bureaucrat hours on a political document aimed at his re-election instead of the betterment of the country," said Rep. Kevin Brady, R-Texas, the top House Republican on Congress' Joint Economic Committee.

One prominent nonpartisan budget-watcher, former U.S. Comptroller General David Walker, lamented that the White House budget was "not bold enough or specific enough" in dealing with rapidly growing entitlement spending.

"The president's budget fails to lay out a substantive path to restore fiscal sanity," concluded Walker, who is now CEO of the Comeback America Initiative, an antideficit advocacy group.

From environmentalists to consumer groups, Democratic constituencies fared well in the president's budget. The Commodity Futures Trading Commission would get a 50 percent increase to help it implement financial reforms, and the Securities and Exchange Commission would get a boost of more than 20 percent. The administration proposed a 60 percent hike in pipeline safety spending following the deadly 2010 gas line explosion in San Bruno and the crude oil leak into the Yellowstone River in Montana last year.

Despite the cuts, the Obama spending plan falls far short of balancing the federal budget. After four consecutive years of trillion-dollar deficits, the White House projects that its latest plan would reduce the red ink to $901 billion in 2013.

In the end, Obama's budget was driven more by political realities than fiscal concerns. With the presidential election less than nine months away, the incumbent sought big spending increases on popular initiatives. He requested $476 billion for transportation projects including roads, bridges and high-speed rail. He sought an $850 million increase in grants for high-performing schools under his "Race to the Top" initiative. And he wants to pump $8 billion into a fund to train community college students for high-growth industries.

To offset the spending increases, the administration proposed to raise taxes on all families earning more than $250,000 and requiring households with annual income of more than $1 million to pay at least 30 percent to the IRS.